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Newspapers Need Online-Only Classifieds to Protect Market Share

Newspapers that consider offering online-only classified line ads to their customers often do so with trepidation.

The worries are common. We need to build our weakening print liner volume. We don’t need to develop a product with lower revenue and that will encourage our print customers to buy online-only and discourage them from buying print anymore.

A good way to start such a product and avoid some of these concerns is by starting small and then tracking total print and online ad volume to make sure both are being managed correctly.

The price of an online-only liner ad should be slightly higher than what a customer will get when buying both print and online together. After all, they should be getting a discount on both products when they buy both.

The sales effort should target inactive accounts — those who have not bought an ad with the paper for more than six months. They also should go after accounts that have never advertised with the paper because they couldn’t afford print rates or because they have bought online-only products from the competition.

By targeting these types of accounts, the sales staff will control the type and volume of ads. The sales results of the product in the beginning will be small on purpose. Newspapers will learn how to implement and price the online product effectively and how not to undermine their print products.

The next step is to track total volume of print-only and online-only ads together. If you had an average of 100 print and no online ads per week in the same quarter a year ago, and this quarter you have 80 print and five online, you clearly have developed a market share problem, especially if your competition has grown their total during the same time period. It also suggests the sales effort of the online-only ads needs to be increased aggressively.

But if you have 70 print and 50 online, you certainly have the opposite problem. Market share is up 20 percent, but revenue will be down because online-only ads are priced much lower than print. And anyone would be alarmed that print volume has dropped 30 percent in one year, although double-digit declines have been common recently because of increased competition and a weakening economy.

In the long run, try to achieve an upsell ratio of 80 percent of total print ads going online.

What matters is total market share, total revenue and total profit. Experience is showing that online advertising is delivering lower revenue per ad because of low costs and high competition. But the low costs also are creating products with higher profit margins.

It is a given of the online future that the economics of media advertising is changing in new and sometimes uncomfortable ways. Online-only classifieds for newspapers is one of them.

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